Cullerton: Illinois pension problem not ‘crisis’

Published: Tuesday, Oct. 22, 2013 5:30 a.m. CST

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CHICAGO – With lawmakers preparing to return to Springfield this week to address the state’s most pressing issues, Senate President John Cullerton is suggesting the $97 billion Illinois pension shortfall isn’t as dire as other top leaders contend.

During an interview Sunday on WGN Radio, Cullerton said the shortfall isn’t an imminent crisis but acknowledged finding a solution would help bring down income taxes.

“Let me also just say that people really misunderstand the nature of this whole problem,” Cullerton said. “I don’t think you can use the word crisis to describe it at the state level.”

Lawmakers are facing pressure to act on the state’s pension problem, considered the nation’s worst, as growing payments to meet the state’s obligations cut into education and other services and repeatedly harm Illinois’ credit rating. After years of shorting payments and failing to find a solution, legislators have faced constant criticism but insist they understand the urgency of addressing the issue.

But Cullerton’s most recent statements starkly contrast the more dire scenario painted by Gov. Pat Quinn, the state’s business executives and other legislative leaders. Quinn has said he was “put on earth” to solve the problem, and wants lawmakers to address pensions before anything else this fall. Democratic House Speaker Michael Madigan last January described the pension crisis as “the most serious problem affecting the state of Illinois today.”

Republican Senate President Christine Radogno said Monday that the state’s dozen bond rating downgrades over the last five years demonstrates the urgency of the problem. Yet, she called Cullerton an “outlier suggesting we need to do less and [not] take it as a priority. I disagree with that.”

House Republican Leader Jim Durkin said Cullerton’s comment “defies all logic and the facts as they stand.”

A bipartisan committee working on reform for more than four months is split over a plan that saves $138 billion over 30 years. The plan includes reducing 3 percent annual compounded cost-of-living adjustments in retirement benefits to half of the rate of inflation. But it also would reduce employee contributions by 1 percent – a concession to state employees for other sacrifices proponents say will allow it to better withstand a certain constitutional challenge.

Republicans recently have demanded that other savings components – including raising the retirement age and giving employees a 401(k)-style option – and they’ve asked for an analysis of those options that could take several more weeks to obtain.

Cullerton’s support of the $138 billion plan represents a significant departure from a plan he sponsored in the spring. That plan, which according to Senate estimates would save $58 billion over 30 years, would have given employees a choice of the benefits they would receive during retirement – a provision Cullerton said gave it a greater chance of withstanding a court challenge. A different plan backed by House Speaker Michael Madigan would have saved almost three times that much by cutting pension benefits across the board and raising the retirement age.

In the WGN interview, he said the state is making progress on the pension issue by putting more money into its five pension systems under a 1996 law. He says that it’s “something we have to deal with, but not something we’re on the verge of bankruptcy on.”

He says he wants to lower the annual amount the state pays in, which will generate savings to allow the state’s income tax to be cut.

However, Cullerton said, the situation is not as dire as the city of Chicago’s pension systems, which he said are at risk of collapse.

Lawmakers begin their fall veto session Tuesday. The state’s pension systems boards will be meeting next week to determine the statewide contribution to the funds for the next fiscal year. Contributions consume about a fifth of the state’s general revenues this year, and are expected to increase slightly in the years to come.

Cullerton acknowledged in an interview with The Associated Press last week that votes on pension reform and other high profile pieces of legislation, including gay marriage, could be pushed into the new year for practical purposes. He said it wasn’t clear if there were enough votes to pass the pension reform proposal.

He said if Radogno gets 12 votes from her caucus on the pension plan, he can secure the 18 votes necessary to send the legislation over to the House.